Suppose you want to purchase a patent which will give you $7000 a year forever and will grow at a rate of 8% every year. The patent costs $50000. If the discount rate is 12% what is the NPV of the patent and what is the IRR.

Suppose you want to purchase a patent which will give you $7000 a year forever and will grow at a rate of 8% every year. The patent costs $50000. If the discount rate is 12% what is the NPV of the patent and what is the IRR.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

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Suppose you want to purchase a patent which will give you $7000 a year forever and will grow at
a rate of 8% every year. The patent costs $50000. If the discount rate is 12% what is the NPV of
the patent and what is the IRR.

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